Bonus - overpay mortgage or put into pension

[TTCm]

I am receiving a bonus of just under £2k. I usually have this paid to me but obviously
lose a lot In tax deductions etc.

i am due to be on maternity leave next financial year and we’re saving to pay off as much in mortgage overpayments as we can by 2026 when our current interest rate comes to an end. This money will therefore go towards that. (We have £270k left on the mortgage and hope to pay off at least £100k in overpayment so this is relatively small in the contribution).

my DH has always put his bonus in his pension so he doesn’t pay tax on it etc and thinks I should do the same. But my focus at the moment is to try and get the mortgage down as much as possible and then look to top up my pension.

for background, I’m 33 and on £47k.

what would you do - I know it’s not a huge amount, but don’t want to waste it!

pension compound intesrest will make it a better investment, DH is putting it into his pension not mortgage overpayment you should do the same

Have you got savings?

Half and half if you can't decide?

Thanks all.

yes, @Riverlee we do have savings, around £60k, which will be going towards the mortgage overpayment (less an emergency fund).

I have around £30k in my workplace pension on £16k in a LISA which has gone down in value since Covid.

@SweetSakura oh, I will have to check with payroll if this is an option, but may be a good plan!

Pension. You save the tax and benefit from compound interest, assuming it's a DC scheme. I wouldn't use it to overpay mortgage but everyone and their circumstances are different.

Pension.
Especially since your earnings will go down during maternity.

Pension all day. Interest free (if you can salary sacrifice) and it'll really add up

I would have said pay off your mortgage, but since husband has invested his into his pension. I think you should do the same.

Pension. You'll get tax relief.

Pension especially as yours isn’t currently brilliant. How much is in your husband’s pot? Given what you’re said i suspect more than yours. What is your current interest rate on the mortgage?

It will make hardly any difference to your mortgage payments, put it in your pension. Don't go into maternity leave with the mindset of it being your role to make the financial sacrifices.

Thank you all for taking the time to give your thoughts. I will ask payroll on Monday if it’s an option to pay it into my pension. Thank you 🙂

If it’s ok for your H to put into a pension then you should do the same too!

pension
mainly because you already have a good chunk to overpay on the morrgage.
if you didn't I would do half and half.

plus, it's your bonus.

Pension👍